By Loubna Flah
By Loubna Flah
Morocco World News
Casablanca, August 16, 2012
Morocco World News got a hold of an official document presumably sent by the minister of finance Mr Nizar Baraka and the governor of Morocco’s central bank Mr. Abdelatif Jouahiri to the IMF board earlier this week.
The 62 pages document contains the request sent to the IMF for a precautionary line and Liquidity (PLL) credit worth $ 6, 2 billion for over two years. According to the document, the IMF delegation met last month with Mr. Baraka, the Moroccan minister of finance, Mr. Jouahri, governor of Bank Al Maghrib and minister of economy and finance in charge of the budget, Mr. El Azami to discuss the role of the PLL on policies to support domestic growth.
The document provides the IMF board with an account of the current economic situation with reference also to the political context that led to the constitutional reforms and the election of the PJD-led government. It provides also an insight into the macroeconomic outlook and the policies implemented by the authorities to support growth and to ensure macroeconomic stability.
In its summary of the recent economic and political development, the report puts the blame of account deficit on the spike of world oil prices that led to a widening of the current account deficit from 4.3 percent of GDP in 2010 to about 8 percent in 2011 as well as the fiscal deficit from 4.4 percent of GDP in 2010 to 6.9 percent in 2011.
The document also explicitly explains that the government’s decision to raise fuel prices is intended to address the increasing macroeconomic pressures and ensure fiscal stability. The head of government had asserted that this measure will not have any detrimental effect on the social level and that it is intended to meet the needs of the poor in the first place.
In the leaked document, the government makes the pledge to increase potential growth by 1% by implementing a set of planned policies, including the consolidation of transparency and accountability.
Yet, the attempts to curb corruption and to bring corrupt official to justice have been rather dawdling and shy. As far as transparency is concerned, the public opinion was not informed about the commitments made by the government in return of the IMF precautionary Line credit.
The government promises to reduce the cost of the social protection system as well as subsidies. The report boasts its plan for subsidies reduction especially in the fisheries sector announcing that subsidies were totally eliminated in July 2012.
Seemingly, the Moroccan government has opted for austerity to tackle the country’s economic woes. The figures provided in the leaked document (page 34 / table 1 entitled Morocco: Selected Economic Indicators) reveal the government’s resilience to squeeze gradually public finance from 34. 4 % of the GDP in 2012 to 29. 5 % of the GDP in 2017.
The pressing question is how the government can undertake drastic social and structural reforms claimed by the masses in the most ailing sectors like education, health and employment while tightening the belt, bearing in mind that these three sectors request infrastructure building and renovation.
The document provides more shocking facts. The figures submitted to the IMF confirm that the GDP cannot exceed 2.9 % in 2012, whereas the head of government Mr. Benkirane asserted in his address to the house of representatives last Monday that a projected growth of 3.4 % is expected in 2012. He stated also that he maintains confidence in the national economy.
Ironically enough, the figures provided to the IMF regarding prediction for the GDP in the forthcoming years seem totally surreal. The report predicts that the growth will go crescendo from 2.9 % in 2012, to 5.5 % in 2013 and sustain its relentless progress till it reaches its best performance with 5.9 % in 2017.
The government contradictory statements on the potential growth and the lack of transparency regarding the implications of the IMF precautionary line of credit increase the mistrust felt by Moroccan towards their government in regard to the grimness of the economic situation.
Besides, the planned austerity measures are expected to affect severely public services and the quality of life. Austerity measures have usually a high social cost when applied to a vulnerable economic system.
With debt, budget deficit, more spending cuts and the potential increase in taxes, many fear that the situation in Morocco may start to bear some resemblance with the Greek crisis.
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